Re: What is Equity??? - Posted by John (WA)
Posted by John (WA) on December 15, 1999 at 10:28:02:
It’s the difference between FMV and what is owed on a property. However, there’s a distinct difference between the literal definition of equity and the conversion of equity to cash. For example, say you have a house with a FMV of 100,000 and you owe 90,000 on the home, it’s equity is 10,000. Just realize that to some degree that 10,000 is not much more than air. Why? Because so many things can and do affect the market value of a home such as time of year, market trends, curb appeal, terms of sale and the list can go on. Also, if a person is wanting to convert that equity to cash, selling costs will be involved. The cost of selling a home will depend on a variety of things too. Bottom line when investing, that first 10% of “FMV” can evaporate in a hurry. There are some things you can do to capture or retain that air by offering good terms to people who need flexible sellers. This may include owner financing, a lease option or something of the like. Hope this helps.